China links 'could help to salvage London Stock Exchange’

The London Stock Exchange could reach out to build stronger links with China as it prepares to lose Europe's largest travel operator TUI, says a leading business commentator.

Shareholders in TUI voted to abandon the firm's London listing and focus purely on Germany's Frankfurt. The company says the move will simplify its structures and improve liquidity. It comes after the travel firm recorded better-than-expected profits in its latest quarterly results.

The number of UK listed companies has fallen by 40 per cent since 2008. There were 120 new listings in 2021. That fell to less than 30 last year. In 2023 the London Stock Exchange raised $972 million in new share issues – compare that to a whopping $13 billion raised on the Nasdaq.

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Investment manager Justin Urquhart Stewart believes the London Stock Exchange can benefit from an unwillingness for companies to go to America. "I'm a great critic of the London Stock Exchange and the way they've been behaving, because as a stock market it has to go out and market itself and it markets it so incredibly badly at the moment," he said.

"Having said that, what's happened in the past few years, you see far more focus on the high-tech shares which you see in the Nasdaq and see how far they've gone and really what the boring commodities, all companies, all those ones which are often which you will find on the London market, they have barely moved at all.

"So in comparison, you see all very dull, old-fashioned companies not moving very far, but the dynamic Nasdaq ones actually really pushing a long way ahead. What London's got to do is actually do what it does best, which is very international, attracting business, often in smaller areas as well. And it needs greater links, say, further links into China, to be able to have greater links of liquidity between those countries, between those companies.

"And that's how we do it, because a lot of companies don't want to actually go to America - as you get caught up in American regulations. And what you have find then, is you find yourself in prison quite quickly."

Urquhart Stewart emphasised just how London could work with more of the emerging Asian markets. "You're seeing huge change in south-east Asia, throughout Malaysia and Indonesia and those sorts of areas and you're seeing a move away from the old-fashioned commodity areas into more manufacturing and developing and also in the retail side. So that I think is very exciting," he added.

"Also, with more businesses being set up there, they're becoming more entrepreneurial but they need more capital. To access that capital locally, it's quite limited. Internationally, there's much more London can provide with them. London linking with China could actually provide a very, very strong linkage indeed."

Some experts claimed late last year that the London Stock Exchange is in a 'doom loop' and Urquhart Stewart admits these are tough times for the institution. "It's all feeding into a narrative among some investors that dark clouds are hanging over London and it's a place to avoid or escape," he insisted.

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